Ghana’s banking sector is sitting on unprecedented liquidity, but credit growth has not kept pace, creating a significant lending gap. According to the 2026 Industry Outlook by the Ghana Association of Banks, total deposits in the sector rose to GHS 302 billion by October 2025, representing a nearly seven-fold increase since 2015, when deposits stood at GHS 41.3 billion.
Over the same period, loans and advances grew more modestly, rising from GHS 30.1 billion in 2015 to GHS 103.1 billion in 2025, resulting in a sharp decline in the loan-to-deposit ratio from approximately 73% to around 34%.
The report notes that “Credit growth, however, has lagged deposit mobilisation, resulting in a low loan-to-deposit ratio and significant unutilised lending capacity.” This conservative lending behaviour is partly a legacy of the Domestic Debt Exchange Programme (DDEP), which led to elevated non-performing loans that continue to constrain risk appetite. Banks have responded by adopting cautious lending practices, reinforced by prudential regulatory reforms, macroeconomic pressures such as inflation, and currency volatility that have affected credit quality.
The gap between liquidity and lending presents both a challenge and an opportunity. While banks have the capacity to extend more credit, they are prioritising balance-sheet stability and prudent risk management. The Outlook highlights that this untapped lending capacity could be strategically directed toward productive sectors, including small and medium-sized enterprises (SMEs), agriculture, and infrastructure, especially under stable economic conditions. The report adds that “If fiscal discipline is sustained, inflation remains contained, and policy credibility is preserved, banks will be better positioned to expand high-quality private sector lending, support infrastructure and trade, and deepen financial intermediation.”
Despite a strong deposit base, the slow pace of credit growth means a large share of available funds is not being channelled into the real economy. The low loan-to-deposit ratio suggests that banks are maintaining liquidity buffers rather than aggressively lending, reflecting a deliberate focus on asset quality and capital adequacy. The 2026 Outlook stresses that “The consistent outpacing of deposits relative to asset growth highlights the sector’s strong liquidity position, providing banks with ample capacity to meet operational obligations,” while cautioning that careful deployment of these resources is essential to avoid undue credit risk.
The report also points to the drivers behind conservative lending, noting that risk-averse behaviour is reinforced by the need to rebuild capital buffers and recalibrate risk appetites after the shocks of the DDEP. Banks are required to fully recognise credit and valuation risks, prompting more conservative risk pricing and careful balance-sheet adjustments. “Banks are now required to operate with stronger capital discipline, sharper risk pricing, and renewed focus on asset quality,” the Outlook emphasises, underlining the sector’s ongoing focus on stability and resilience.
Looking ahead, the combination of high liquidity, stabilising macroeconomic conditions, and easing interest rates creates a window for renewed lending activity in 2026. The report indicates that banks have the capacity to expand private sector lending, particularly in sectors that drive economic growth and employment. If deployed strategically, this liquidity could support SMEs in critical value chains, agricultural expansion, and infrastructure projects, helping bridge gaps in financing that have long constrained development.
The 2026 Industry Outlook paints a picture of a banking sector at a crossroads: abundant liquidity provides a strong foundation, but cautious lending practices and a focus on risk management mean much of this potential remains untapped. How banks navigate this delicate balance between growth and prudence will define their contribution to Ghana’s economic recovery and development in the year ahead.
With deposits continuing to grow and liquidity remaining robust, the next challenge for Ghana’s banks will be converting this strength into productive credit without compromising stability. The lending gap highlighted in the Outlook represents both a risk and an opportunity. If banks can strategically deploy these resources, 2026 could see a meaningful expansion in credit to sectors that drive growth, employment, and financial inclusion across the country.
